| Abstract [eng] |
The main purpose of this work is to evaluate the impact of capital structure on earnings management in listed companies of Baltic countries. The work consists of three main parts: the analysis of literature about capital structure and earnings management, the research and its results, conclusion and recommendations. Literature analysis reviewed concept of capital structure, main sources of financing and ratios used to analyse capital structure, as well as theories that explain capital structure decisions and their main ideas. The author also analysed concept of earnings management, its’ types, motives to use earnings management based on various theories. Motives for capital structure decisions and using earnings management were compared and common attributes were identified. In literature analysis, author also analysed scientific researches carried out in order to analyse the impact of capital structure on earnings management. After the literature analysis, the author has carried out the study on the impact of capital structure on earnings management in listed companies of Baltic countries. During quantitative research, financial data of 44 listed companies for period from 2020 to 2023 were analysed in order to evaluate the impact of capital structure on earnings management in listed companies of Baltic countries. The author calculated ratios used to evaluate capital structure and coefficient of earnings management, carried out their statistical, correlation, and regression analysis. The results of the research were statistically processed with the Gretl programme. In order to establish a correlation between capital structure ratios and earnings management, Spearman’s rank-order correlation coefficient was used. Results of regression analysis were tested using t-test, coefficient of determination and Chi-square test. The performed research revealed that correlation between capital structure ratios (financial leverage, debt costs, return on assets (ROA), return on equity (ROE), debt-to-equity coefficient, as well as additional factor – company size) and earnings management is weak. Chi-square test revealed that the difference of estimated and observed values of the model is a statistically significant, therefore the author was not able to evaluate the impact of capital structure on earnings management in listed companies of Baltic countries. After modifying the model and splitting the sample into smaller groups, it was identified that financial leverage and debt-to-equity coefficient impact earnings management in consumer staples and consumer discretionary sectors, and return on equity (ROE) impact earnings management in consumer discretionary sector. Return on assets (ROA), return on equity (ROE), debt-to-equity coefficient and company’s size impact earnings management in real estate sector. However, the effect of capital structure ratios differ in different sectors. The conclusions and recommendations summarize findings of literature analysis and performed research. The comparison of motives behind capital structure decisions and earnings management based on different theories, as well as the results of the study presented in this thesis are valuable in scientific sense and can assist in future research. Based on this work, a scientific article was published in a journal „Buhalterinės apskaitos teorija ir praktika“ which focuses on research of accounting theory and practice, as well as the proceeding of conference „Naujoji karta su LMT“ which is organized by Research Council of Lithuania for students to present their research results. |
